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Holiday Pay - Mind the Gap?

As you may remember, there has been a flurry of holiday pay cases over the last few years.  After a small period of calm, the latest case of Chief Constable of The Police Service of Northern Ireland & Anor v Agnew [2019] has brought the issue back into the news and raised some serious questions for employers about their liability in connection with holiday pay.  In this article, we’ll talk you through this latest development and what it means for you.

In the case of Agnew (mentioned earlier), the Court of Appeal in Northern Ireland (“NICA”) held that a gap of three months following an underpayment of wages (which would include for example underpaid holiday pay) does not break a series of deductions in an unlawful deductions of wages claim. So what does that actually mean for you in practice?

Well, prior to this decision, the Employment Appeal Tribunal had established in Bear Scotland Limited v Fulton that where three months had passed between deductions (e.g. a failure to pay the right amount of holiday pay) this breaks the series of deductions in the claim.  The practical impact of this is that: (a) anything occurring prior to the three month break could not then be included in an unlawful deduction of wages claim brought after that 3 month period; and (b) this offered comfort to employers who were concerned about holiday pay claims being brought that would date back over many months or years.

However, in the case of Agnew, the NICA disagreed with the approach in Bear Scotland and said it could lead to arbitrary and unfair results. The NICA held that whether there has been a series of deductions is a question of fact and a series is not ended as a matter of law by a gap of three months between unlawful deductions nor is it ended by a lawful payment.

At this stage, it is important to note that the case of Agnew is a Northern Ireland case and it is not binding on the tribunals in Great Britain.  Instead, the Tribunals here will be required to follow Bear Scotland Limited.  So what is all of the fuss about then? Well, claimants could use this case as persuasive authority to challenge the authority in Bear Scotland and try to persuade the English courts to follow the Agnew approach. If successful, this would reduce the current protection for employers by enhancing the potential for longer periods of back pay to be claimed.

In addition, this decision (Agnew) is of interest to employers in Great Britain because the wording of the legislation for both jurisdictions are identical. Consequently, this is another reason why the same arguments advanced in this case of Agnew could be applied to cases here in Great Britain.  

For employers, this case acts as a reminder to review holiday practices and ensure that they are being operated in line with the appropriate employment law requirements.  In addition, employers should now keep an eye out for the next decision in the courts of Great Britain on this issue to see whether Agnew has any impact on the same.  Watch this space!

This bulletin is for general guidance only and should not be used for any other purpose. It does not constitute, and should not be relied upon as legal advice.

 

JMW Solicitors is a Limited Liability Partnership.